Proposed DC Budget Would Gut Affordable Housing Programs

Seems that Mayor Gray has decided that the District of Columbia should get out of the affordable housing business.

Hard to see how else one can interpret the end results of the proposed cuts and related policy changes the DC Fiscal Policy Institute details in its brief on the proposed Fiscal Year 2012 affordable housing budget.

The affordable housing budget, if one can call it that, is hard to get one’s mind around — three different housing agencies, a number of programs designed for different purposes and, to some extent, different segments of the population.

And there’s housing in the homeless services and mental health budgets too.

Brief overview of the biggest issues, as I understand them.

Housing Production Trust Fund

The mayor’s proposed budget would siphon $18 million out of the Housing Production Trust Fund as a substitute for the customary separate appropriation for the Local Rent Supplement Program.

The $18 million cut wouldn’t be a one-time thing. The same amount would be transferred — though not necessarily to LRSP — every year until at least 2015.

The Trust Fund is a major source of local funding for affordable housing construction and preservation. It’s the most flexible tool we’ve got.

Developers can use Trust Fund commitments together with other public sources, including certain types of LRSP vouchers, to show private lenders that their projects are credit-worthy. The Trust Fund can also provide critical time-sensitive grants and loans that enable tenants to purchase the buildings they live in.

The Trust Fund gets a percentage of revenues from the deed transfer and recordation taxes that buyers and sellers pay when properties in the District change hands. So it’s been cash-short ever since the local housing market cooled a couple of years ago. As a result, lots of approved projects in the pipeline have stalled.

But the market’s on an upswing again. So some of these projects could move forward if the revenues earmarked for the Trust Fund were left where they belong. With the proposed transfer, the Fund would instead have $1 million less next year.

Only $8.9 million would be available for the Fund’s core purposes. It will have to use increasing amounts of its total revenues for debt service on bonds. So what’s left for core purposes will shrink over time. Only $4.8 million will remain in 2015.

Local Rent Supplement Program

The transferred funds would not sustain LRSP. Far from it.

The mayor’s proposal would phase out the tenant-based vouchers that are part of the program. These are the vouchers that recipients (all very low-income) can use to help pay market-based rents on any approved unit in the District.

The District would continue to subsidize rents for current voucher holders. But as households left the program, their vouchers would effectively disappear. So another major affordable housing tool would continuously shrink.

LRSP also provides vouchers that are attached to units in affordable housing developments. Like the tenant-based vouchers, they’re supposed to make rental housing affordable for a range of very-low income residents. And indeed, they do.

But the mayor wants to use all vacant LRSP units for the District’s permanent supportive housing program — a key part of the Department of Human Services’ homelessness strategy.

Though PSH is affordable housing, it’s only for individuals and families who’ve been homeless for a long time or recurrently due, at least in part, to severe challenges like mental illness and/or substance abuse.

So another fund shift — or the equivalent. And another case where a tool that was serving a particular purpose gets used for another.

Bottom Line

At the end of the day, the shifts would drastically curtail the District’s efforts to ensure that low-income individuals and families can afford to be part of this “one city” the major has promised.

It’s up to the DC Council now to restore the funds the mayor’s budget cuts.

The Coalition for Nonprofit Housing and Economic Development and allies in its Continuum of Housing Campaign have organized a rally to urge this. We’re asked to show up at the John A. Wilson building tomorrow, May 3 at 6:00 p.m., just before the last of three back-to-back hearings on Fiscal Year 2012 budgets for D.C. Housing Agencies.

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Hi! I'm Kathryn Baer. This blog is one way I use my skills and experience to support policies that will reduce the hardships poor people suffer and the causes of poverty. You can find out more about me here .